State Street (STT) 12 Apr 242024 Q1 Earnings call transcript

Good morning, and welcome to State Street Corporation's First Quarter 2024 Earnings Conference Call and Webcast. Today's discussion is being broadcasted live on State Street's website at investors.statestreet.com. This conference call is also being recorded for replay. State Street's conference call is copyrighted, and all rights are reserved. This call may not be recorded or rebroadcast or distribution in whole or in part without the expressed written authorization from State Street Corporation. The only authorized broadcast of this call will be housed on the State Street website.

to at Fiszel State like of Global would Relations Investor Street. I introduce Bieler, Ilene Head Now Please go ahead.

or to Ron we'll get first; the Thank the today's download you. from started, will the in earnings or our presented our CEO, IR slide us. On of basis you all take these Investor directly for will on be I would Good our regulatory morning, to Instructions] Before items also first like website. appendix investors.statestreet.com. GAAP we take is available to excludes Reconciliations GAAP. website, to section and Relations call thank on measure you through presentation, presentation presentation, questions. today, section quarter remind that measures our are adjusts that our more most which Eric [Operator non-GAAP in Aboaf, results available then will or of you slide happy our joining O'Hanley, of Afterwards, one include CFO, speak XXXX our the a for comparable available

today factors Actual in Form presentation variety factors XX-K. important statements. statements those contain such forward-looking due differ our in and of filings, may SEC including addition, today's the as from In to materially discussion will a our our in results factors, those referenced risk

them, if views change. our Our forward-looking statements obligation speak only as of even any to today, and we update disclaim

Now to let me turn over it Ron.

everyone. morning, you, Ilene, good and Thank

total meaningfully strategy to all first our focus quarter franchise, breadth year growth, execution. client released and continuing results. of expenses. controlling our the the our in with underlying while invest fee reported strong both on efficacy today, Earlier business demonstrating to of our the and and We had results revenue we financial We a our start our

total as the relative we leverage notable as positive ago growth EPS QX year both operating well to solid in fee and period. Excluding items, delivered

quarter was first The milestone. an important

also to items each the competitive remain across our our by operating growth are leverage, in including markets our focused detailed both leadership undertaking through these and which fee our extending intensely innovative XXXX client for in solutions franchises; excluding growing and we as we outcomes continue to advisers while purpose revenue; target areas continuing notable productivity to change to against extend operating a operating continuing dynamic priorities to on initiatives for global are strategic our X in expectations of gains. delivering priorities, our investors our are: strategic executing capabilities our the XXXX, Guided further have invest and business technology-led the business in and they fee particularly help financial business We positive our growth. We and in significantly. better in serve, XXXX. These strategic to priorities advantage aimed people and create support at financing differentiate world's enhancing capabilities continue priorities optimizing model; market our environment

quarter. timing cuts inflation For investors Despite economic indices as from rate yields example, this, first during increased benefit global back robust, elevated as potential remains central and their intelligence equity ceded data be bank a treasury records continued the with in expectation fears for artificial strongly and muted markets continued performed the economic to optimism and many the remained and of QX. volatility surrounding of economic landing hard setting push

fee both Eric our I Year-over-year, X with detail. Beginning leverage through review will quarter we highlights excluding in Turning first you growth, operating as notable to performance, XXXX total Slide presentation. positive takes before our as EPS the of items. produced quarter started our well and investor financial strongly. more good

lower than continued increase notable was item and revenue in NII our by year-over-year, investments impact notable which supported quarter expenses the common level ongoing EPS to $X.XX, of increasing productivity be with have first fee items, of continue by increased related to excluding special or more just $X.XX FDIC was to supported business. expenses growth revenue. assessment. Underlying total total EPS the controlled, on quarter the our a efforts, the offset share X% growth First even Underlying repurchases, excluding well as year-over-year we

AUC/A by our which to fee asset generating the can in client you see $XXX slide, QX, $XX.X We the a Turning on services, wins business trillion. in growth. we record our target Europe. hitting franchise sales our both key to make we fee After achieve progress billion and revenue goal $XXX asset $XXX sales Within totaled million. confident XXXX. North increased middle our of continue America ability to generated AUC/A $XXX and in fee momentum, remain supported better million our million of wins to across million servicing of revenue XXXX, of $XX year increased full to Servicing in revenue in wins servicing

fee back-office sales grow revenue excellence and leading Street Alpha our to year a driving platforms. this and stronger priority private with differentiating Our by with service markets strategy is State underpinned of

new competitive differentiation the execute business. and creates Our also Alpha quarter Alpha this strategy clear advantage demonstrate showcasing that X our to wins while the ability mandate our on for

services for created low client we consolidate now trading a revenue FX a supported becoming wins of second this Encouragingly, higher year-over-year, FX, no the both back-office see markets market-leading wins win, X% attracted solutions. In even higher were key can with a pleased headwind competitor takeaways other by services, are that alpha growth and shared first office for and Street Alpha State Q-over-Q example, with the for area an one install wins quarter Alpha For to which both revenue from to sequentially Further, prior client mandate of both we Street. Within in back us. and with existing FX having volumes us quarter, volumes, quickly State the growth. will the include these one wide-ranging mandate our is a to and client and the industry key volatility private client FX financing, faster. realize as allowing Alpha fee our markets

Within QX. Global business buoyed million the actions fees well, product we expand acquisition also taken have trading, by to strong our we of the position higher point year-end our XXXX franchise. continue our equity and management performed outsourced Global We are capabilities the step-off $XXX reach, markets, XXXX. strategic at Advisors geographical of asset management markets Trading completing CF the highest finish and and of expanded quarter for growth XQ the the to XXXX. of benefits since in first

date billion with the aggregate quarter quarter, total business. net and trillion defined positive in inflows of the impact continuing contribution net consecutive gather the net was fourth $X QX, we share cash a ETFs. saw U.S. quarter experienced in institutional end, ETF inflows reached the the driven expected of a expand business. continued GA target While $X.X market driven to by at client of redemption GA inflows AUM momentum by low-cost single in business record but large of cash We our saw outflows this within franchise. Encouragingly, within our

Now let efforts. productivity me on spend continuing moment our a

business We set at initiatives productivity and across lasting efficiencies cost our have detailed creating aimed a of improvements.

to India India, these ongoing in operations that unlock our as and our end-to-end consolidated know, joint Regarding streamlining first enable are model. we operating second an in initiatives, model of the continued forms X. Combined, venture our operating which our we important our operations I global Street transformation to pleased of productivity last April note in on operations in consolidations quarter, the and simplify our propel productivity joint model venture the State country. am these you consolidation years operating of we the savings as closed will X ahead transformation, part

cap return my conclude remarks, dividends and I Total our in capital in like touch return a opening recent over quarters the quarters, balance highlight capital of Before continuing XX% at on quarter last million would end. of to equivalent to I State that to to we share I the with capital consisting shareholders amount first total common quarter, have amounted Street's our $XXX sheet almost repurchases. X returned substantial of strength. would share total market

As delivered XXXX have our form in share it return this approximately and we capital share by of as subject market business outlined discipline and common conclude, revenue the growth, return XXX% as expense to normalized of of encouraging level year, capital a a we and pivot start in earnings factors. To the repurchases, to sequential fee previously, underlying return. to we demonstrated and continued have total year strong strong remains conditions year-over-year both wins, intention other dividends more to

plans business generating efficiency operating comprehensive with execution paired As aimed across at strategic remain productivity and improvements fee in at of XXXX. we action this of investments, we growth a set and of longer-term backed highly look is ahead, XXXX. initiatives, set set focused the in a leverage areas. Underpinning on positive driving aimed our operating for clear model of driving our priorities detailed by are business of each priorities execution strategic These effectiveness a

in hand take detail. me over who Eric, you the call the let quarter Now more to will through

everyone. Ron, and you, Thank morning, good

Turning slide. my an quarter to the Slide assessment items notable table a results, impact review FDIC X, I'll of described the our from on of begin which additional as included within EPS $X.XX financial special right first the

noted, to the a As produced year. we Ron strong start

ago growth, and higher the expenses year-on-year. both well the and On controlled. management sequentially growth, software you to delivered up underlying fee year Relative left fee panel, while and front fee period, revenue total can that revenue see servicing we data was robust were office

to for X the credit recorded losses during names. All notable told, operating CRE mentioned both to we total we I due year excluding of $XX positive As the ago, and first largely relative leverage provision generated items. fee million, quarter, a

supported the also first solid year-on-year buybacks We excluding share XX%, continuation quarter. items, the of growth EPS our which of was in notable delivered by

driven increased higher X. up FX on that end client Turning Slide basis net AUC/A record trading versus end center period market indices by in largely volatility X worth a period X of now levels fees, record into of spreads X% and market provide points was by to flows. and AUC/A market X% equivalents inflows and higher level. largely increase level, ago. Quarter-on-quarter, slide, cash year seen higher and higher levels in end period-end special to due new right market servicing to levels net up AUC/A to we At the an agency drives primarily year-on-year, percentage and the a to Year-on-year, AUM client period sequentially note reflecting in the estimated that useful a a XX% cash year-on-year a XX% primarily lending. We total the activity Advisors AUC/A mix client activity I market business a transactional increased increased and due flows. Global period period would end of and have shift levels. sequentially, indicator also end saw to

Slide Turning to X.

disclosed previously total you'll levels, lower earning quarter a left partially cash primarily fees the and in client up lower average including by client and and higher see changes On X% client transition market cash servicing side adjustments, activity into the asset year-on-year, first equivalents. pricing offset of page, certain from headwinds, mix

slower the expected pace started the in we quarter. addition, In first installation than of

dimension me these for of some Let you. items

I've client growth. of percentage As impact of previously transition the you disclosed told before, points approximately was X headwind year-on-year a to the

X%, certain cyclical. Sequentially, servicing changes the pricing asset up cash we including were believe is and mix average headwinds. of client activity this to quarter, client approximately activity percentage some of growth a year-on-year by primarily as lower higher total also shift offset addition, adjustments, partially of and In headwind a was and market including client points result which adjustments, lower to levels, mix fees the asset X of

our of summarized of the North On spread $XX quarter, business. the million wins, key Europe. In servicing servicing performance nicely the fee the bottom some of America indicators of both across generated and first we we slide,

was last you conference this described like recall, sales North of in had at fall. one America goals solid we a that the As

In be addition, of year-on-year fee $XXX $XX we had revenue up $XX servicing and million quarter to at end million million installed quarter-on-quarter.

period $X.X of end. be had to trillion also AUC/A at installed We

Turning now to Slide X.

reasons, were up periods, lower repricing the were market prior management partially and reflecting XX% inflows the X% impact ETF to average suite Relative by due fees from higher fees primarily initiative. offset net management partially offset prior of the year-on-year, quarter strategic up fees. similar quarter, performance to by product First levels a

portfolio, its billion. bottom-right record $XX That low-cost As ETFs, quarter, the XQ following net of inflows client. gains billion. In were flat businesses. saw a franchise area institutional by outflows continued slide, first can said, SPDR In investment market saw our in in contribution our of quarter the flows in with driven of driven $XXX we we share remains by U.S. business, the AUM well first of our relatively 'XX, with overall on management positioned momentum the achieved approximately primarily defined suite, each $XX see you U.S. record inflows continued across net billion, of momentum single

positive net cash consecutive first into franchise, quarter saw fourth we cash. billion, $X flows the quarter our of in inflows of Lastly, net

Turning now Slide to X.

higher but year trading FX was mainly volatility, to X% partially services was up quarter ago lower by FX Relative First due offset with X% the period, strength of spreads. Quarter-on-quarter, volumes associated as year-on-year, as spreads all higher sequentially. in revenue nearly our down as decrease business particular client FX to engagement the reflects the well subdued revenue direct increased increase the across X% with higher EM FX volumes primarily our venues.

balances finance were demand quarter On with and as have mainly we First due agency a significantly lending securities lower quarter-on-quarter up is year-on-year, industry basis, balances associated lower rising. spreads, specials seen revenues XX% primarily to down lower activity. agency

and discuss driven detail our lower primarily software revenues I'll in by Software fees offset fees declined up to by with and which XX% on-premise partially processing more lending-related largely in QX, higher fees. Quarter-on-quarter CRD associated processing XX%, renewals, shortly. due higher were year-on-year

revenue the the revenue $XX year-on-year. Finally, other million, quarter, quarter recur. which devaluation increased not prior $X currency increased other did an Sequentially, fee million in episodic driven for by fee largely

Moving to Slide X.

increased that by on-premise panel software Sequentially, driving down data left quarter and software-enabled office and installations. data of result continued primarily office revenue and as the lower SaaS implementations growth. a revenue front year-on-year, first conversions services was and driven XX% renewals on see and You'll professional revenue XX%, primarily front higher software

Alpha to for we business alpha mandate. Turning report the to second including Alpha were on markets wins, some our the right of private additional X metrics pleased panel,

addition, mandates bringing live mandates of to X the XX. number live the In in quarter, first total went

First over over client driven by year-on-year, and ARR the quarter implementations XX% increased XX SaaS year. conversions last

Turning to Slide XX.

primarily primarily driven year-on-year by growth, were both better on than but partially a NII pleased driven year-on-year impact partially the average X% was increase and previously and increase $XXX rates, in decreased the end in deposits. The we basis a sequential of the First deposit client balances, the and deposit and average NII, by noninterest-bearing quarter an had loan interest investment was lower balances in higher growth shift by largely investment average due to interest-bearing average yields towards million. increased The to by report quarter securities expected, deposits interest-bearing of decline positions. We in X% noninterest-bearing mix which results sequentially deposit offset NII lending higher noninterest-bearing to decrease were offset quarter. strength portfolio sequential

are difficult is in path forecast clients. deposits in environment, the with While engaging the the current to pleased it of we're success having that our we

this to period, currency. the current partially lower were be less across the of by U.S. deposits. basis rate and the range our -- deposits the quarter-on-quarter. Cumulative offset decreased on $X deposit increased XX% On year-on-year client deposits X% reduction stack, cycle right noninterest-bearing the XX% driven to quarter-on-quarter, continuing for depending balance cumulative during a interest-bearing by start provide balance same XX% of we currency the highlights noninterest-bearing foreign the mainly sheet than deposit billion betas Average average Average dollar with X% growth since client in quarter. from by in slide, first

Slide XX. Turning to

benefits India. Information well offset excluding and incentive line-by-line by compensation barely investments, the X%, efforts X%, technology was First the and by notable notable year-on-year and expenses a associated ventures contractor infrastructure of largely savings on increased as decreased by India joint of funding. due benefits, employee and we mainly partially lower due offset the fuel partially and than year-on-year that and items costs the by the within increased initiatives. Transaction X% used broker compensation due in and joint in operations venture foundation contractor other quarter partially partially X%, by size one expenses of spend salaries systems the increased compensation driven more our to as estate a increased optimization increased basis, part savings and vendor with cost of as optimization of of the market reflecting primarily decline higher in timing form footprint growth consolidation both expenses, driven consolidation to to to basis, volumes. Occupancy global which to a savings XX%. On mainly increased invested our increase fee optimization more processing X%, real fees excluding productivity to higher XX%, communications items, due

moment I'll efforts. on transformation a our spend Lastly,

If you recall, last consolidating October FTE those the as first count joint head we operation's venture in-source increased our capabilities.

year. of However, $XX million the with it came also costs course the integration benefit, of financial expected excluding over an

The mentioned, our April of well financial Ron from this benefits. joint as head consolidation count as improvements consolidation phase catalyst joint and closed year. for Street's also will come and with India in State second X X, As XQ will of be savings productivity service wave to venture a increase operations the an us additional enable create the transformation ventures second of and expected in operations on these a next of next Global

Moving to Slide XX.

of side slide. trends by left X we the the right CETX on of ratios our evolution leverage detail the capital Tier the On and our followed the slide, of

can As you see, minimums. capital well above levels the remain regulatory our

our to balance While capital stack, strength us continue our focus enables we sheet support capital to optimizing clients. the of extend our on to position our

was of quarter Street for the a Bank of largely XX of standardized expected and basis RWA. The driven and healthy XXX% normalization down CETX was by of points ratio our As quarter-on-quarter, XX.X% State approximately Trust. XXX% end, Street LCR State Corporation

metrics and of return and were $XXX consisting and active we from to of declared $XXX liquidity sheet nature to shareholders strong of diversified base million stock million quarter, repurchases deep the in funding the exceptionally dividends. balance Our pleased benefit share management. In common our million common $XXX

this return to quite to XXX% summary, expect to we're shareholders pleased of with As quarter. Ron noted, around we year. In the continue earnings

are executing drive strategy items. set clear operating and we a a to excluding priorities continued expect business notable to positive in of fee this for order against growth, deliver increased have momentum that leverage year, detailed We

second let have highlight which the continues macro cover the to me quarter would potential and I year environment Finally, our outlook, variability we're operating given in. full for

assuming around current here to In first averages the implies XQ daily of and for up are up in we X% quarter terms quarter-on-quarter which year, end full stand today, as we year. markets equity the of flat our remainder assumptions, for global XX% the

outlook remain broadly note forward move, to the expect volatility with I current rate continues would market muted. aligns curve, while we Our FX which will

business levels, year, activity be lower-earning the actions and impact market which to start higher X%, nature, There industry of these previously and full and we with our client total the strong and is better will client of our client are, episodic asset the believe the up are this higher which the however, end prior year, portion cash year-on-year, at X% expect fee solid offset a this in X% servicing for to our and a year disclosed now higher to year. up additional average including impacting includes Given previous of revenue shift guide a headwinds outlook. think than we our and so sales mix some cash and transition into of equivalents. We cyclical factors adjustments, management

Turning to NII.

for but this additional full ex about notables, As roughly of better with down guide year approximately we improved approximately year-on-year a in revenue-related full line which expenses, expect result of costs strong rate be we is with will than our X% our X.X%, down the first previous will quarter NII now of some year. and our growth potential outlook, be deposit up outperformance, interest guide prior XX%. On the expenses, year expect

notable fee Given year, expect excluding for additional the full our positive leverage to now improved outlook, deliver we items. operating

the XQ losses that to We to a and down fee expect notable to up million continue up think excluding to to on X.X%, NII X% the be X%; in XQ, range to on turning we and $XX view provisions X%; compensation notable and expect total a monitor million in X% could excluding credit XQ quarter down better in as we basis for expenses later be would to items, be the items. to Finally, would about revenue seasonal our we portfolio. expenses X.X% quarter-on-quarter $XX the in and to have

me XQ we to hand Ron. tax Lastly, call that, approximately rate XX%. And be let the to back expect with

Operator, for open can now we questions. the call

your [Operator first at Hawken be And will Instructions] from question Brennan UBS.

quarter. Eric, pull suggests you And noticed that NII And you your But of drove Could expect was little updated around that robust the is from embedded what here it give color a one to quarter. repo was here that guide little is? a how back that particularly the bit your in in things in this sustainable strength? normalization some I the result guys first strong sort of of outlook?

in And seeing different economy we're the clients into repo percentage to stronger had did a of variety of noninterest-bearing conditions that NII NII had cash balances [ both a They're the their They tick NII first in we our about the Brennan, The across -- was than that more quarter. drove bulk instruments. million were a that There as small stack up terms, ] side a expected, to expected. as up That in terms are into on is results in the relative worth think in but evolve, of balances the the more putting point sheets. factors part, balance that it's of than on are I in expectation. The well. and the actually what we then interest-bearing Eric. of our for holding deposit continue as number made coming upswing well. uptick $XX the

side it's a aided also it's repo sweeps sometimes been sometimes into the by Sometimes And operations. deposits, on reduction been and repo Fed's in that's overnight the repo. on bit the it's in

mix better So factors though, we're performance, NII of we're a which a seeing, it's which pleased with. driving that are together, really

Yes. Great.

also BlackRock impact quantified You the the transition. of

ongoing us impact as where is you could have And as little Do give that? stand read on we update than that prior that. right seem though the So a the an on thanks I for your as does expectation. It far larger maybe goes? impact maybe

amounts we is Sure, expected. had terms Brennan, it's that that of Eric transition line again. client referenced in had announced The we in previously

servicing X year, worth couple is on the amount of we year-on-year and which a that fees. And of said about total total about original last percentage of this point year. about be this quarter points basis the X over years, of it'd we're disclosure seeing we come our you fees, points total through remember, to of be had percentage about had recall, for a back worth percentage if and this go fees to described If you half

And so what previously fully in we line had with described.

will be at Glenn question Next from Schorr Evercore.

The a quickie higher, follow-up I but NII predict, that the rates coming stuff. balances One are hard might know are we on give with is March. things really that profitability the stick? discussions these client this management balance and to into is Or overall you something those confidence happening think parking safe with as balances custodian? the of should

we've years seen of shift levels. rate X.X heavily the with evolution quite say, we've at over year, your and engaged as the different the a last of interest question been couple deposits clients banking our the a environment answer Glenn, system. I'd I'd in in

$XXX client services that us. And both bring offer. them They is is billion to had going we had that have think quarter. of we to encourage that total profitability, can the the that of to about we this the the billion. relationships, around into now million in And client billion in honest, level. lot to year, $XXX see the it expect all And to think we that continue we engagement at first, client be with for I a that this we $XXX expected balances cash, way we've deposit that $XXX we And and clients. part client certainly

I is you're of think here so of due aggregate the action. in And what levels seeing management to some deposits our higher

somewhat there tend be banking the deposits I think system. do that, to in addition in to higher

helpful. tide see very the that's forward, how been Fed obviously and the going gently neutral the been actions they expect be but but And And we at that need say evolve. has So based I'd on rising, various relatively gently. to we'll to

that. cool. Very Appreciate One quickie.

the specifics, I'm but comment picture. more You can't talking on big

that of fit -- named potential strategically, interest better the big manager. like on are of You were talking theoretically CN where SSGA, some growth I'm flows terms franchise? in picture might but private in that just you in ], continuing [indiscernible] and [ on across more in credit focused what I some

Ron. it's Glenn,

tried to grow is over I first we've clear what to the continuing ETF doing quite franchise. at around be mean So we're SSGA. about

last know, business, its our the where franchise, growing strength to several years continue ETF is which the focused you And As portfolios lot That we way and the be we've those move. find that a did low-cost repricing up, retail tends which investors. legacy share year, strong. through into in on to institutional quite has the gone has initiative intermediaries. tend quite led retrospect to are because in be the move to last smart proven a market we to These portfolios over buy-and-hold

ETF and fixed a strength have couple in seeing bit it of income, of runway with you're one. ecosystem partners strong So offering then last a the the ETFs lots typically very to years -- lot particularly be with fixed continue out would and we've active. And in space, income in grow And of active Europe, we finally, quite and Europe. working in out we here the close of in U.S., ours, we built the a see in

growth and their institutional index ability really leads distribute passive gives institutional business. products leverage legacy that That we the you believe table, area services. potentially other of a we seat to is If the you base it on client manager trying and us kinds gives #X #X at relationship, to -- platform. an Second of is to be or because the the we have its an tend

our business. And on lot where continuing is to of that's So then focus now, the finally, institutional a deepen.

We have it a global franchise, more. but there's we areas deepen can that

leverage and we're as opposed geographic -- continue broadening to focused to markets have and grow, really just Europe, talk on as about Asia as us much You've those on deepening positions heard able reach. focusing the and we Pacific but we're to

it's about and we're how with that, nutshell, thinking playing we're So out. in how is it, a pleased

Next will Alex at be question [Operator Blostein Ken Jefferies. Instructions] Moving Sachs. Usdin Goldman from on to at

similarly, million NII. I to one of that's of and quarter, of you of the the the of are What as in quarterly your stable on second rates repricing or run the so your and well of full the back guess, portfolio. for comments a the saw year half of of maybe securities $XXX drop the deposits elevating are, quarter, on of good guess, also. still getting meaningful year what tune NII pretty for Another the back seems are good guess, But the sort informs for they benefit NII guide towards year? versus guidance are being this given sort rate. Eric, kind last I in decline sort higher off where I quarter kind we to guidance have your

least Alex, to the continue steps. it's the some comes how of through describe through, going does that pieces going a to level see at lending. The trends various to would We're over a Eric. we given current in play curve as which the seeing that fully matter navigating each I just investment of the from plays We're of and tailwind other continue have in rates, been that continued a tailwind and offset portfolio see in been or partially we've gives it's some time. forward to us the because headwind growth

deposit in levels, deposits down, sometimes grind flatten year. and step to down just the the deposits, see levels second expect interest-bearing the and nice around quarter noninterest-bearing another we where noninterest-bearing the deposits, we do honest, at of trend it's I to out half that, half continue across to seeing of back stack is up, then be sometimes the down of we're a the think, a And while to step

see trends you'll so -- think those continue. I

guide the think leveling see I together, if modest a out. NII. we fourth off And quarter. third our step we'll then we But -- of a in come the you take quarter expect into see where and our down second you'll we

I different in think million million deposits putting of come us, being engagement But with to range. But the $XXX quarter client will kind dictate tailwinds $XXX with we've price through, seeing of points to factors it's comfortably above about as talked level the earlier, said of million the in that range at and putting as quarter. per those I a of we've and those be that headwinds past, will I've play expect that a -- $XXX us. in had we now where exactly out. deposits We're terms think,

deposits those transactional sport of are custody the accounts. core Some need that

better in those one good we've think deposits expectation and that's then the in. endure And amount and years. than beginning the and shown some the we time franchise, are had earlier upside the of been signaled a creating, real of coming some and really NII of I think, provide in over discretionary this has we one stability at for will And that the think the that I success priority year

second That's right. around All expenses. was question helpful. Great. My

well, but line benefits? year this incremental, in Can to You talked you're cost for outline of kind terms growth frame right. of JV, you that? the as XXXX will I there expense guess, well? what next into April that know the of how you for continue if I that to place overall consolidation the or year, I in opportunity mean However took here, about a just really could is wave ] that regearing kind holding either recently got maybe that means the [ want of optimization And new of what an that create for franchise? benefits

Yes, Alex, it's Ron here.

the We've our of and through I a it. is these years. unlocks in we journey. to expenses. already lot not in true a So wave you The of -- term, that. right? believe talked That here days take created focus which and but eliminating definition, to created complication. was we we've new comes we tailwind. near been that a the advantage is growth. And enables why for long ongoing this productivity can a started. more a JVs, we back complication, just to really you're important by the lot to that created because improvement. of and Well, our what potential of the end-to-end immediate on early on more about complete a almost that? That had This work importantly said ventures improvement got go offshoring out, was at and as get has margin if us We've you're But you've simplification. We unintentionally, at process it now firstly, productivity of taking think it's And colleagues your good do for that

some of in on spending folks operations recent hiring great leadership are lot brought time and Our done India. They've there. a some

of job improve. And take passes of lot the between at have there. a level we -- checkers at and those you that about work checkers we would of And importantly, you of directed this that technology people of and repetitive said, tasks up use amount between of the that things end then have all we stuck labor that's India lower a feeling for other AI that checkers if past, content you've of our think machine well, labor particularly kinds simplification, one, technology our not with the be It operations, eliminate So in as as you replace directed to to of to be learning and here eliminate the can end now of to will advantage there people cost, And careers and a, they're see these to like labor. dead end-to-end tasks. repetitive importance this simply investment, opportunity some is make through you more got the labor ability to some attractive finally, where things, this a of of of kinds and want in then arbitrage. opposed enormous can an will let's but to continue the cost amount very kinds

this. about are optimistic very we So

from Deutsche be question at will Next Brian Bank. Bedell

First, Eric. the a guidance on gave, you confirmation Great just

for revenue NII On expenses? down up X%; to X%; X% X% X.X%. the fee Is and sequential year-over-year revenue that up XQ to to for X% expenses

of every look sequential you those No, forward. it was for as one

was to it all on basis. So a XQ XQ

XQ basis.

Okay.

you I back flattening out versus [ or XQ XQ? out X% So XX% then then did XQ? down NII flattening think in to then going to And guide, in in also X% the ] X% down said again the to you say and

the What flatter I year. half is a of second described

it of client deposits, level the of different of come ] on the depend And of the honest. at [ back level of paths deposit tail are end the will [ And so just really we've here, to the be ] through those. that there described. interest repricings or rates, some how just

range some aggregate there's What the I down think I is we a in high-level that's will NII better and basis, XX% of expectation guided -- X% towards. in down scenarios. confidence from Brian, do have a view, quite year So gave had that full that previously a be some but the than we a bit

flattish of if that is you on to I'm achieve? the like of outcome And better this be that of a more difficult sort Or flat range? Yes. use flat end is but -- your I the that at sort the as range, year that a cadence, would if Right. be I for said, NII -- would just assumption, a, but year-over-year really

try me No, let to clarify.

NII We I that basis expect XQ, be, a year-on-year the say did flattish expect to roughly NII and in we year. X same, be on X% quarters. between is to be for down to total the be What full to XQ those

expectation not right? volatility I to in macroeconomic third underlying the quarter that our from the just And is and range then does quarter scenarios out we're that in sentiment, into foresee. But you could so come Central second in exact there's the the overspec client does there think the in exactly down? the deposit fourth different second of much quarter now a by of quarter, trying of the the And much by risk-off then come combination And how risk-on conditions levels. there's it kind is reason in how quarter, actions, down Bank's And quarter? question

And context go that on. enough gives you to hopefully, so

of there. the expectations That's you X like talk what helpful. looking could markets, wins. over Alpha markets And years? It if your then pipeline the just sounds next just super X your private maybe on like in momentum is about improving is to Maybe private kind and

of we've Brian, stand as opportunity operations stacks, operating talked as these Ron. nicely lower that and some has, many some reasons but by become a firms mean the that. more just and future double-digit [indiscernible] developing private business. potential for about that's technology the costs complex us, operations. proof We markets, see growth for business of growth not the Alpha for of a private way lots I We -- being is it's Alpha largely same to improve an it's

well. developing it's So

optimistic remain it. about we So

be at Next question Smith Autonomous will Research. from David

Could you was talk in bit about the ratio year somewhat capital payout Your first a your full little your priority target? XXX% today? quarter below more

a as full through. on there's of We set variables Eric. year each at year it's different as gave right? David, the basis Because navigate we guidance beginning a purposely, be the to we quarter, of going

that aggregate remarks. capital total to in reaffirmed our described prepared and we around return earnings the So year, for we be in

usual of came If you expected the the of than through first had then quarter. the specifics into remember, normalization RWA we the quarter, go in lower fourth that a

just Some market book. of factors that playing on is through FX the

equity in securities is the and space. agency Some of that markets upticking financing

shareholders. of fee honest, And with the back some clients, with you is putting our that driving engaging of be to it, growth to capital work priority same capital time, get revenue to them, some our just and is to saw. At the that's where we're

quarter. dividend our continued as We had this at pace, buybacks you'd We some expect.

math, do few for going the increase activity that next buyback quarters. will the If you forward

new about the assessment. the had also information We FDIC

accrue that had we returning particular to capital this for for of quarter. expense so instead shareholders And to

be to every accelerate just capital commitment our our on to So with we're get priority bit line quarter you'll this but shareholders second to with the honest, quarter. anyway, track -- little see is I back year. just way in earnings a will and that describe, And into a to different, think it

And I full tax the for Are the rate XX% think XX% gave the second you for expecting to you quarter. still year?

estimate a not back go the did place, a that think back good think one the full correct. update quickly year, use to -- you to those we good and January on call. the I need for remarks, that's but to that's the so had I Yes, I January

$XX they'll in to million last one still second will dividend, then the range $XX the be quarter, the kind in of in be of the $XX million cleanup. second like And million year? preferred more half it The Okay. just elevated but

a $XX the to quarter million from quarter redemptions next literally, correct. got that's in some of kind X We're of redemptions, elevation of million and past Yes, of at quarter, quarter the more and one about Yes. through you've $XX X the then onwards. dividends, quarter the $XX second range will quarter meaning and the There's run it quarter right. just timing tactical third then moving million issuance between this it and

be Next Wells Fargo. Mike from question Mayo at will

you Can hear me?

We can.

is of lag with the changed And a Can there the and XX% NII for down relationship your kind XXX, so? your fees with by how you to being servicing What or used instead and much guess what month impacts remind X%. for the you revenues markets S&P XX% talk of that last about you of Can it days along change I us guidance down is exactly that? every have amount. stock these that, between to x

Eric. it's Yes, Mike,

relative what Let in those really higher me our happened On deposit NII, interest-bearing order. the in reverse and in stock across on even March. was to answer balances expectations first quarter noninterest-bearing the

beginning was expecting it back today. positive way, off, that in what March. the around And we reassessed fewer from gave that an And we year So year we we're higher in world. into central full the And only first higher the is a the with that did that. on rate full generally. that quarter We for reassess expected XX% we've back We level down, of created step the us be of January time in that a banks the reassessed factoring deposits cuts not we're that it's changed today the had expected. The uplift NII not full year. at on guidance last basis, to when

guide And question, to need through it NII. If full us it turn better what to equity year We market gets need to how so go -- fees. that's factors pieces. through I servicing we be to then a on in the

me And so let start.

the ] including the XX%, have. With S&P to material XX% not what's because on footprint more servicing than to basis we're year-on-year tailwind But emerging XX%, typically. S&P is right? of fees only our broad, to XX%. a financial index up markets. up statements global, year-on-year All-World X% just that in we that's the X% it and a tends move range, and expect is around. given to our what And substantial is of that More Index The First, matters equity while are global revenues and us international [ up we'd

timing a of there's As bit you said, sometimes there.

servicing so client X did that to bit things: worth X was and about were or fee this I'll a one we worth and transition, X headwind then see that to cyclical. a was headwind headwinds; and almost different points mix we've level of of describe is year percentage a that some previously announced points was there's this of that which lower forth. What Sometimes -- activity was continued the think client year, of there of see we

talked then in for a Some to that and accounting for lower and we've through within at quarter, transactional rate fee schedules. And get which services. paid also is this activity tend of basis to shift we cash come that much on to client fee tends about that custody referenced we cash the our stack a unit the equivalents AUC/A

went against pieces those that And the were us. so

one just just And you was Why follow-up, that? more-than-expected deposits. -- said

conditions ] improved is -- very deposits think That is overnight or there that X way the One Fed of more-than-expected tends system. back that's have conditions system, liquidity banking liquid. U.S., our banking is them into in be or operation made by in been what think think generally mix more today. that's repo the our the driven particular, a in running. central that really a comes in clients in reduction more And cash that's I -- to in factors. to into the even I the system [ the the bank is actions, the added liquid We

margin a deposits what think our obviously, and be I'd helps we've clients, every balance honest, years, on been also money way is that clients but cash X.X in in we is our market, in us with for engagement very is second with last areas that's put their deposits, where sheet. cash those We're over to cash. we sharpened with and more engaged, cash, to and time services because keep market we've earnings factor, repo, X I and our years, They with and their in engaged us our in in increasingly And put over And money say, healthy, resulted of offer find done the to with then the they suites clients. always one delighted economically.

Next at question will Bhatia be from Rajiv Morningstar.

for headwinds? versus you we for understand pricing your asset-based. environment nonasset-based fees remains the the servicing asset-based business? Can about If should bucket? pricing lower I higher the expect it, in longer, do as how of on is then is your And headwinds comment service inflation pricing compare bucket How XX%

X business we had a think, seen so X% will now rise we've our our the year, the quarter. reduction a that's general this effect or seen, a during little level. fee way accentuated And And repricing. I it's fees. had of describe, We've bit a in rates pricing not bit back been to inflation. which be seen partial to but a time, servicing below float the substantial an to on the kind float years I'll where that's by bubble roughly what headwinds of described seen that large around last in -- really by in XXXX. It's servicing a it in in a And inflation. It headwind We've or -- in or margin question. was, environment, way because I we've broad will around substantially that very point, your or

it's particularly -- of it's determinative not that. so And been I think

fees. have components. are basis are asset-based. some is It's one account right, -- some fees. an In end some custody have package. They terms fees. a you're there very the package schedules, particular differently. being There's about when usually of some when transactional as There part half. is fee a is under of are negotiated that flat that not fees we several There There for fee schedules the treated And which just up those per that asset negotiations of have our

what that they're XX, a deliver custodian and can large, value set so a fair have lasts That of often as years, a as XX, they're that for a on clients. They partnership, their be they are. think fair a XX, cases, some feel sophisticated in honest, XX, to amount -- expectations getting XX of it as right? that We we, package. they looking fees And feel of which

to comes be their I reasonable our in think, And so it a minds, accommodation, minds. in

Next question will be Usdin from Jefferies. at Ken

Sorry that earlier. for

servicing on just algorithm. follow-up the one Just fee

better business you see all fees the commentary ]. Do show we the on, the made. detail a the to path with and of any of some of some know come headwinds start due kind and to and cyclical, you some abating where a about to office middle way. and deconversion see line, some still things with And that positive you've the still about and office a and us is year-over-year And front the when basis wins can consider the of you all thing. kind we But forward kit biggest talked to a that's about. [ a growth rate sight back overall? flattish start transitions to there the on whole can as I really see we on come line So those of starting to that have the we move that's growth together But know we headwinds, up in line the can have good office

been Yes. And the side. The why less next basically the go other transition, like going I year, on that of will forever, will but client here? feels more on start go don't away know no changes abate. assuming I will effect away, it's that or it Ken,

a X. goes to headwind So

more Secondly, last you've saw year. importantly, sales seen you and -- performance perhaps the

business. up Part complicated install, of some still typically they remains high install will to-be-installed installing kinds very seeing the this waves to us. tranches. You're tend of they That that's they are is for very, sales that year the performance building it in Alpha and clients --

that. But year back these of in in the from there's performance amount So installs we'll make a sales, would fair and note of faster. recent progress against some quarter, it I just continued sales office which last

growth, get servicing in sold quite overcome we're what the to what particularly office installed. about but importantly, we in you we've reap growth and more so fee here those And Alpha, of as sold optimistic headwinds, opportunities the in back start revenue revenue fee benefits

somewhat these I through those we accounts. described, mix that custodial activity as that cyclical. it's mix, We that same would we've don't described has risk-off continuing at client of right? Ken, see a lower And towards just pace. We is we've cash which led which sentiment, Eric. the to just headwinds shift transactions this had And the then add a see

over we There case levels actually You'd generally on much made could clients. expect be are to get or possible that even hand neutral to I a think think cash don't year be expect client -- start deployed the cash and I be to more -- with there's should of tailwind. a next

we've going phase type those bit of been franchise. cyclical environmental a the I headwinds. then think Ron of could described to those, growth what So you I around and here some think of sales, and underlying and through on through without installation a the activity And see mix

of talk to can through? Have Where now put strengthen? to the that? pipeline just you more you consistent? follow-up wins and be put to continuing pipeline do just point. one And see then it you stand Okay. also is is we the we the Ron's installed the what on Can about yet Is and that pipeline, on

in significantly have mean, we standing a from is have before. I that what sales which Ken, was that That's we up think I today from year up the talked sales target by target. year, you last about heard that from should Yes. significantly us January, we're

because So I there get mean pipeline. of you the

pipeline. our by encouraged we're So

I like closing the time, over And for to Ron to turn would remarks. at call this back

for Well, all thanks to us. joining on the call of you

call this Ladies again, your conclude you time, indeed we that you today. attending. ask Thank conference disconnect at please for gentlemen, this and for do you. your lines. thank Once does And